Lanxess AG VP-Sr Credit Officer

CORPORATES

CREDIT OPINION18 February 2021

Update

RATINGS

Lanxess AGDomicile Koeln, Germany

Long Term Rating Baa2

Type LT Issuer Rating - FgnCurr

Outlook Stable

Please see the ratings section at the end of this reportfor more information. The ratings and outlook shownreflect information as of the publication date.

Contacts

Martin Kohlhase +49.69.70730.719VP-Sr Credit [email protected]

Moritz Melsbach [email protected]

Matthias Hellstern +49.69.70730.745MD-Corporate [email protected]

Carsten Johann +49.69.70730.966Associate [email protected]

Lanxess AGUpdate to credit analysis following affirmation of Baa2 ratings

SummaryOn 14 February 2021 Lanxess AG (Baa2 stable) announced that it had signed an agreement tobuy ASP Emerald Holding LLC (B2 stable), also known as Emerald Kamala Chemical (EKC) for anenterprise value of €1.075 billion (around €885 million). When this transaction is expected toclose in the second half of 2021, Lanxess will then benefit from a higher share of more resilientand high margin specialty chemicals. Around 75% of EKC's activities are exposed to consumerspecialties - animal health, food & beverage, flavor & fragrance, home & personal care - and theremaining 25% to industrial end markets such as plasticizers for construction, adhesives andpackaging solutions. With an EBITDA margin in excess of 20%, Lanxess group EBITDA will notonly benefit from the contribution of EKC, but also from the exits of low margin or loss-makingbusinesses. The acquisition of EKC will be paid by cash and cash equivalents that amounted toaround €1.5 billion as of 30 September 2020. The transaction is thus gross debt neutral.

The Baa2 rating of Lanxess continues to take into account its realignment towards becominga more specialty-chemicals-focused company. The Baa2 rating also reflects the exposure tothe challenged automotive end market, about 20% of group revenue exposure, that is partiallyoffset by the strength of Consumer Protection segment, which benefited from increaseddemand during the COVID pandemic. Although the rating point-in-time is weakly positioned,with an EBITDA margin of around 13.9% for the last twelve months ending September 2020and gross leverage of 4.1x (all metrics Moody's-adjusted), we expect Lanxess to recuperateEBITDA through a recovery of growth and incremental contributions from acquisitions. Pro-forma the transaction we expect Moody's-adjusted debt/EBITDA of 3.7x in 2021 and 3.2x in2022. The Baa2 rating also reflects the excess cash Lanxess is holding and the liquidity profilethat pro-forma the transaction remains solid. We expect Lanxess to roll-over maturing bondsin 2021 and 2022.

Exhibit 1

Leverage and coverage metrics

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

0x

1x

2x

3x

4x

5x

2015 2016PC 2017PC 2018 2019 2020e 2021e

Total Debt/EBITDA Net Debt/EBITDA RCF/Total Debt RCF/Net Debt

PC (proportional consolidation); Moody's estimate based on the proportional consolidation of Arlanxeo. Emerald KalamaChemical included in 2021 expected figures.Sources: Moody's Investors Service and company filings

http://www.surveygizmo.com/s3/1133212/Rate-this-research?pubid=PBC_1265656

https://www.moodys.com/credit-ratings/Lanxess-AG-credit-rating-808385139/summary

https://www.moodys.com/credit-ratings/ASP-Emerald-Holdings-LLC-credit-rating-824039013/summary

MOODY'S INVESTORS SERVICE CORPORATES

Credit strengths

» Portfolio realignment towards a higher share of specialty chemicals to enhance the business risk profile and future quality ofearnings - higher margins and lower volatility - and cash flow

» Management’s strong track record of executing restructuring measures, integration of acquisitions and conservative financialpolicies

» Strong liquidity, which provides financial flexibility

Credit challenges

» Still significant automotive exposure of around 20% of sales and exposure to other cyclical end-markets

» EBITDA margins at the lower end of global investment-grade-rated specialty chemicals sector peers, despite steady improvements

» Acquisition risk, inherent to Lanxess’ strategy of further strengthening its business portfolio

Rating outlookThe outlook is stable and factors in further improvement of Lanxess' gross leverage towards and below 3.0x. The stable outlookassumes a continued shift towards more profitable specialty chemicals through organic and inorganic growth. Given Lanxess' resilienceduring economic downturns, as shown in 2020, we are accepting gross leverage to be outside of the threshold for some time, which isalso supported by a strong RCF/net debt figure of around 28% in 2022 with the full-year contribution of EKC.

Factors that could lead to an upgrade

» Further strengthening in the group’s business profile, demonstrated by the resilience of its operating profitability and cash flow

» A permanent reduction in financial leverage, allowing total debt/EBITDA to drop below 2.0x and retained cash flow/net debt toincrease to the high 30s in percentage terms on a sustained basis

Factors that could lead to a downgrade

» Significant deterioration in operating profitability, the pursuit of large debt-funded M&A transactions or a significant step-up in cashreturns to shareholders

» Increased leverage and some marked weakening in financial metrics, with total debt/EBITDA remaining above 3.0x and retainedcash flow/net debt falling to the low 20s in percentage terms on a sustained basis

This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page onwww.moodys.com for the most updated credit rating action information and rating history.

2 18 February 2021 Lanxess AG: Update to credit analysis following affirmation of Baa2 ratings


Key indicators

Lanxess AG

12/31/2015 12/31/2016 PC 12/31/2017 PC 12/31/2018 12/31/2019 LTM Q3-2020

Revenues (USD Billion) $8.8 $7.3 $9.1 $8.5 $8.2 $7.0

PP&E (net) (USD Billion) $4.0 $2.3 $2.9 $3.1 $3.1 $3.1

EBITDA Margin % 10.5% 13.3% 13.5% 14.2% 14.9% 13.9%

ROA - EBIT / Average Assets 4.4% 5.0% 6.4% 4.8% 5.5% 4.5%

Debt / EBITDA 3.2x 4.2x 3.3x 3.7x 3.5x 4.1x

EBITDA / Interest Expense 7.0x 7.9x 8.2x 8.7x 9.8x 9.0x

Retained Cash Flow / Debt 21.1% 15.8% 16.2% 21.1% 17.9% 16.9%

Retained Cash Flow / Net Debt 25.6% 46.5% 22.1% 33.6% 25.7% 29.4%

PC; Moody's estimate as of 12/31/2016 and 12/31/2017 based on proportional consolidation of Arlanxeo.All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.Source: Moody's Financial Metrics™

ProfileHeadquartered in Cologne, Germany, Lanxess AG (Lanxess) is a leading European chemical company, with reported sales of €6.8 billionfrom continuing operations and company-reported EBITDA (pre-exceptionals) of €1.0 billion in 2019. As of 16 February 2021, Lanxesshad a market capitalisation of around €5.7 billion.

Exhibit 3

Segment EBITDA pre-exceptionals and before reconciliation2019

Exhibit 4

End-market exposure for Lanxess (2014 versus 2019)

Advanced IntermediatesEBITDA €383 mn EBITDA margin 17%

Specialty AdditivesEBITDA €353 mn EBITDA margin 18%

Consumer ProtectionEBITDA €198 mnEBITDA margin 19%

Engineering MaterialsEBITDA €238 mnEBITDA margin 16%

33%

30%

17%

20%

Sources: Moody's Investors Service and company filings

~15% ~20%

~15%

~20%~10%

~10%~15%

~30%

~45%

~20%

Lanxess 2014 Lanxess 2019

Automotive

Chemicals

Agro

Construction,Electronics, Leather

Others

Sources: Moody's Investors Service and company filings

Lanxess has four segments:

» Advanced Intermediates — comprises businesses in the field of high quality industrial intermediates. The segment includes inorganicpigments and a portfolio of advanced industrial intermediates.

» Specialty Additives — a segment, which pools all units that manufacture additives. In particular, it covers additives (that is, lubricantadditives, plastic additives and phosphorous flame retardants, and bromine solutions) and the Rhein Chemie business (that is,colourant and rubber additives).

» Consumer Protection — combines application-focused specialty chemicals used in such areas as disinfection, protection andpreservation of wood, construction materials and coatings. It comprises material protection products and liquid purificationtechnologies business units, as well as Saltigo.

» Engineering Materials — is an integrated engineering plastics business, which includes high-performance materials and urethanesystem business units.



Detailed credit considerationsPortfolio realignment enhances Lanxess' business risk profileThe proposed acquisitions of EKC, the disinfection and hygiene solutions company Theseo for an enterprise value of around €70 millionas well as the biocide company Intace further support the transformation towards a higher share of specialty chemicals. Since 2016,Lanxess has realigned its product portfolio towards a more specialty-chemicals-focused product portfolio, with strong market positions,differentiating technological capabilities and more diversified end-market exposure. This has been achieved through a number of disposals,most notably its remaining share in Arlanxeo and its stake in the chemical park operator Currenta and the acquisition of Chemtura in2017. At the same time Lanxess has divested low margin and non-core businesses such as its organic leather chemical, its membraneand organometallics businesses. We expect the company to continue to invest in inorganic EBITDA growth to further complement anddiversify its product portfolio.

The EKC transaction is in line with the company's strategy to transition Lanxess' revenue mix towards a higher share of specialty chemicals.Management has a track record of integrating acquisitions as demonstrated with Chemtura and acquisitions in the Material ProtectionProducts business unit. Lanxess expects to lift synergies worth $30 million resulting in a post-synergy EV/EBITDA multiple of around 9.0x(around 11.9x pre synergies), which is in line with transaction multiples for specialty chemicals companies. The synergy potential at around7% to annual revenues is higher than for comparable transactions in the sector.

The Chemtura acquisition significantly expanded the footprint of Lanxess’ growing and profitable additive business. This created thesecond- and third-largest competitor globally in industrial lubricant additives and flame retardants, respectively. The combined businesshas a strong backward integration, with long-term secured access to its bromine feedstock needs, and complementary product portfolios,giving rise to cross-selling opportunities. The deal also boosted Lanxess’ presence in North America and Asia.

Since the Chemtura acquisition, Lanxess has disposed of a number of businesses to facilitate the shift towards a specialty-chemicals-focused product portfolio. In August 2018, Lanxess agreed to sell its remaining 50% stake in the Arlanxeo joint venture to its partner,yielding proceeds of around €1.4 billion and eliminating its exposure to the synthetic rubber sector that has chronically been affectedby market imbalances and feedstock cost volatility. In Q2 2020, the company closed the sale of its stake in the chemical park operatorCurrenta, resulting in net proceeds in excess of €800 million (including a €150 million profit participation). Furthermore, the companydisposed of its leather chemicals business in two steps, with the closing of the organic leather chemicals divestment expected to happen inmid-2021. The disposal of organic leather chemicals is expected to result in an initial cash consideration of €80 million plus a performance-related component of up to €115 million.

The company has focused on cost control to lift the margin potential of its product portfolio. Lanxess is aiming at an EBITDA margin pre-exceptional items of 14%-18% through the cycle. As a result of portfolio measures and its focus on cost control, the company's Moody's-adjusted EBITDA margin improved to 14.9% in 2019 from 12.7% in 2016. However, this margin level still is at the lower end of the ratedglobal specialty chemicals peer group, but more aligned to similarly rated European peers.

Difficult demand environment in 2020, but we expect relative resilienceFollowing the trough in the second quarter of 2020, Lanxess recorded again sequential revenue growth in the third quarter supportedby strong volume recovery of around 8.7% quarter-on-quarter. Third quarter 2020 sales were still down by 14% against the prior year.Whereas Advanced Materials and Specialty Additives almost performed in line with group results, the relative weakness in EngineeringMaterials was partially offset by Consumer Protection, the smallest, but most profitable segment.



Exhibit 5

The impact of the coronavirus pandemic on revenue by segmentExhibit 6

The impact of the coronavirus pandemic on EBITDA by segment

1100 876

788858

14941312

1,718

1,497

0

1,000

2,000

3,000

4,000

5,000

6,000

YTD Sep 2019 YTD Sep 2020

€ m

illio

n

Engineering Materials Consumer Protection

Specialty Additives Advanced Intermediaries

Total group sales excludes reconciliation.Sources: Moody's Investors Service and company filings

189110

163

194

269

213

310

253

0

100

200

300

400

500

600

700

800

900

1000

YTD Sep 2019 YTD Sep 2020

€ m

illio

n

Engineering Materials Consumer Protection

Specialty Additives Advanced Intermediaries

Company-adjusted EBITDA, excludes reconciliation.Sources: Moody's Investors Service and company filings

Cost-saving measures that were initiated before and during the outbreak of the coronavirus have a savings potential of around €50 millionin 2020. Positive benefits will be offset by higher exceptional items, that amounted to €94 million in the first nine months of 2020,, dueto higher restructuring (€31 million) and project costs (€33 million).

The company's statement that Q4 2020 was the strongest quarter in eight years bodes well for the pick-up in demand and a recoveryof Lanxess metrics, in particular EBITDA margins towards the mid teens (%) levels and a de-leveraging towards levels of 3.0x. Whileprojected 2021 gross leverage at 3.7x, and around 3.2x in 2022, is high for the assigned rating category, the company maintains excessliquidity on its balance sheet, even when taking into account outflows for announced, but not yet closed acquisitions. We project RCF/net debt of around 23% in 2021 and 28% in 2022.

Exhibit 7

2014-20 EBITDA and EBITDA margin

13.3% 13.5% 13.8%14.9%

12.3%13.5%

0%

4%

8%

12%

16%

20%

0

250

500

750

1,000

1,250

2016PC 2017PC 2018 2019 2020e 2021e

€ m

illio

n

EBITDA (LHS) EBITDA margin (RHS)

PC; Moody's estimate based on proportional consolidation of Arlanxeo in 2016 and 2017. Emerald Kalama Chemical included in 2021 projected figures.Sources: Moody's Investors Service and company filings

Improved macro outlook, incremental EBITDA from acquisitions and divestments of low-performing businesses help reducegross leverageEBITDA growth in 2021 and 2022 will benefit from three factors: an improved macroeconomic outlook with a resumption of moresteady growth in 2021, incremental contributions from acquisitions and the divestment of low-performing businesses. Managementexpects that Q4 2020 was the strongest quarter in eight years with an estimated EBITDA pre exceptionals of around €200 million.This implies reported EBITDA in 2020 of around €862 million, compared to €1.02 billion in 2019. We expect that the chemical sectorwill return to more normalised growth in 2021 with less volatility and more visibility putting Lanxess back on a growth path towardsEBITDA growth.



We expect the company to maintain a balanced approach towards its capital allocation. Proceeds from the sale of Arlanxeo wereused for share buybacks of €200 million in 2019 and also to increase pension assets by the same amount. In September 2020 Lanxesstopped up one of its pension schemes by €100 million. This improved the funding status of pension obligations to 60% from 56%. Atthe beginning of 2020, Lanxess announced a further share buyback of up to €500 million. While the company had already spent €37million for share buybacks in H1 2020, these buybacks have been suspended in the wake of the coronavirus pandemic.

Funds from operations (FFO) in the last twelve months till 30 September 2020 of €696 million were burdened by extraordinarytax payments in connection with the divestments of Arlanxeo and Currenta of around €100 million. Capital spending in relation torevenues is likely to remain elevated due to investments into the EKC asset base once the transaction closes. EKC-related investmentsare expected to be higher to bring assets on par with Lanxess standards.

Exhibit 8

2016-21e FCF development

€ 126 € 150

-€ 69 -€ 32

-800

-600

-400

-200

0

200

400

600

800

1,000

2016PC 2017PC 2018 2019 2020e 2021e

€ m

illio

n

Funds from operations WC Capex Dividend Free cash flow

PC; Moody's estimate based on the proportional consolidation of Arlanxeo. Emerald Kalama Chemical included in 2021 expected figures.Sources: Moody's Investors Service and company filings

ESG considerationsWith an overall ESG score of 57 as assessed by V.E. Lanxess ranks 11th out of 38 European chemical companies and 219th out of aglobal universe of 4,842.

We score the commodity and specialty chemicals industries “elevated risk - emerging” and “moderate risk”, respectively, in ourenvironmental risk heat map. Chemical companies face risks related to water and soil leaks during the production, storage ordistribution process. Furthermore, new research findings or changes in regulations for environmental costs could also have a financialimpact.

It is Lanxess' goal to become climate neutral by 2040. The company aims to halve its greenhouse gas emissions by 2030 to around1.6 million tons of CO2. The implementation of technology supports the goal of reducing emissions. For instance, a facility forthe decomposition of nitrous oxide initially reduces greenhouse gas by around 150,000 tons of CO2 with an additional expansioncontributing a further 300,000 tons by 2023. The use of renewable energy and offset measures will further contribute to a reduction ofemissions. Lanxess has committed up to €100 million investments until 2025 for climate protection projects.

Liquidity analysisLanxess has strong liquidity. The group had cash and cash equivalents of €332 million and near-cash assets (other current financial assets)of €1,175 million as of the end of Q3 2020. We expect FCF of around €87 million for full year 2020 supported by high working capitalinflows of around €111 million and despite higher taxes related to the Currenta divestment. FCF is likely to turn negative, around €116million, in 2021 due to working capital build-up to support growth. The group’s liquidity is supported by the full availability of a €1.0billion committed revolving credit facility maturing in 2024. The terms of this facility do not contain any financial covenant. Pro-formathe acquisitions of EKC and Theseo we estimate a year-end 2021 cash balance of around €800 million.


https://www.moodys.com/affiliate-content/VE/Equity/DE0005470405.PDF

https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1135665


Lanxess' debt maturity schedule is well staggered, with other maturities in 2022, 2025, 2026 and 2027, and the first call date for its hybridnotes in 2023. The next bond maturity is in 2021, relating to a €500 million bond, which we assume will be refinanced.

Methodology and scorecardThe principal methodology used in rating Lanxess is our Chemical Industry rating methodology (published in March 2019), which canbe found on www.moodys.com.

Our Chemical Industry rating scorecard indicates a Baa3 rating for both the last 12 months that ended September 2020 and the forecastperiod, one notch below the assigned Baa2. The assigned rating takes into account the company's strong liquidity profile and theexpectation that over time the company will gradually recover EBITDA generation and be able to use its liquidity to fund EBITDA growth.We also expect that Lanxess will be outside the gross leverage threshold of maximum 3.0x for the assigned Baa2 for longer as it continueswith its transformation towards a higher share of specialty chemicals.

Exhibit 9

Rating factorsLanxess AG

Chemical Industry Scorecard [1][2]

Factor 1 : Scale (15%) Measure Score Measure Score

a) Revenue (USD Billion) $7.0 Baa $7 - $8 Baa

b) PP&E (net) (USD Billion) $3.1 Baa $3.1 Baa

Factor 2 : Business Profile (25%)

a) Business Profile Baa Baa Baa Baa

Factor 3 : Profitability (10%)

a) EBITDA Margin 13.9% Ba 13% - 14.5% Ba

b) ROA (Return on Average Assets) 4.5% B 4% - 6% B

Factor 4 : Leverage & Coverage (30%)

a) Debt / EBITDA 4.1x B 3.5x - 4x Ba

b) RCF / Debt 16.9% Ba 15% - 20% Ba

c) EBITDA / Interest Expense 9.0x Baa 10x - 13x Baa

Factor 5 : Financial Policy (20%)

a) Financial Policy Baa Baa Baa Baa

Rating:

a) Scorecard-Indicated Outcome Baa3 Baa3

b) Actual Rating Assigned Baa2

Current

LTM 9/30/2020

Moody's 12-18 Month Forward View

As of 2/16/2021 [3]

[1] All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.[2] As of 09/30/2020.[3] This represents Moody's forward view, not the view of the issuer.Source: Moody's Financial Metrics™


https://www.moodys.com/Pages/rr003006001.aspx?bd=003006001&ed=&rd=003006001&tb=0&po=0&sb=&sd=&std=&end=&sk=&ol=&lang=en&cy=global&searchfrom=SearchWithin&kw=Chemical%20Industry


Ratings

Exhibit 10

Category Moody's RatingLANXESS AG

Outlook StableIssuer Rating Baa2Senior Unsecured -Dom Curr Baa2Pref. Stock -Dom Curr Ba1

Source: Moody's Investors Service

Appendix

Exhibit 11

Peer comparisonLanxess AG

$ million 2018 2019 LTM 2018

.00

2019

.00

LTM

.00

2018

.002

2019

.003

LTM

.004

2018

.0022

2019

.0033

LTM

.0044Revenue 8,059 7,615 7,165 10,151 9,273 8,695 10,411 9,782 9,132 17,260 13,895 12,124

EBITDA 1,143 1,136 1,039 2,274 1,950 1,745 1,695 1,595 1,306 3,923 1,789 1,185

Total Debt 4,098 4,006 4,006 6,877 6,466 6,849 3,688 4,228 3,833 3,376 3,997 5,800

Cash & Cash Equiv. 1,531 1,208 2,085 226 204 704 1,647 1,579 1,572 989 840 2,284

EBITDA Margin 14.2% 15% 15% 22% 21% 20% 16% 16% 14% 23% 13% 10%

ROA - EBIT / Avg. Assets 5.5% 6.3% 5.3% 10% 8% 6.6% 9.4% 8.0% 5.4% 22% 8% 2.7%

EBITDA / Int. Exp. 8.5x 10.4x 9.2x 8.6x 8.1x 7.3x 14.6x 16.6x 17.6x 21.8x 11.5x 7.7x

Debt / EBITDA 3.7x 3.5x 3.8x 3.0x 3.3x 3.9x 2.2x 2.6x 2.9x 0.9x 2.2x 4.8x

Net Debt / EBITDA 2.3x 2.5x 1.8x 2.9x 3.2x 3.5x 1.2x 1.7x 1.7x 0.6x 1.8x 2.9x

RCF / Debt 21% 18% 21% 21% 21% 18% 30% 26% 24% 72% 28% 20%

RCF / Net Debt 34% 26% 44% 22% 21% 21% 55% 42% 40% 101% 35% 33%

Baa2 Stable

Lanxess AG

Baa2 Negative

Covestro AG

Baa1 Stable

Arkema

Baa3 Stable

Eastman Chemical Co

All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations.Source: Moody's Financial Metrics™

Exhibit 12

Moody's-adjusted debt breakdownLanxess AG

€ million 2015 2016 2017 2018 2019 LTM Q3 2020

As Reported Debt 1,677 2,789 2,840 2,720 2,818 2,807

Pensions 702 1,129 958 965 1,001 1,001

Operating Leases 276 280 168 150 - -

Hybrid Securities - (250) (250) (250) (250) (250)

Analyst Adjustments - - 51 - - -

Moody's Adjusted Debt 2,655 3,948 3,767 3,585 3,569 3,558

Source: Moody's Financial Metrics™



Exhibit 13

Moody's-adjusted EBITDA breakdownLanxess AG

€ million 2015 2016 2017 2018 2019 LTM Q3 2020

As Reported EBITDA 822 932 747 927 954 1,665

Pensions 1 1 3 4 (2) (2)

Operating Leases 65 61 48 44 - -

Interest Expense Discounting (15) (12) (8) (10) (11) (11)

Unusual Adjustments (44) (1) 109 29 74 (785)

Non-Standard Adjustments - - - - - -

Moody's Adjusted EBITDA 829 981 899 994 1,015 867

Source: Moody's Financial Metrics™



Exhibit 14

Moody's-adjusted financial dataLanxess AG

€ million 2014 2015 2016PC 2017PC 2018 2019 LTM Q3-2020

INCOME STATEMENT

Revenues 8,006 7,902 7,699 6,530 6,824 6,802 6,237

EBITDA 681 829 981 899 968 1,015 867

EBIT 235 329 460 495 530 555 397

BALANCE SHEET

Cash & Cash Equivalents 518 466 2,520 588 1,339 1,076 2,767

Total Debt 2,910 2,655 3,948 3,767 3,585 3,569 3,558

CASH FLOW

Funds from Operations 485 606 720 778 840 730 696

Change in Working Capital items 224 61 (46) 117 (289) (116) (12)

Cash Flow from Operations 709 667 674 895 551 614 684

Capital Expenditures (CAPEX) (649) (485) (488) (438) (519) (556) (479)

Dividends (46) (46) (55) (75) (85) (90) (93)

Free Cash Flow (FCF) 14 136 131 381 (53) (32) 112

Retained Cash Flow (RCF) 439 560 665 702 755 640 603

RCF / Debt 15% 21% 17% 19% 21% 18% 17%

RCF / Net Debt 18% 26% 47% 22% 34% 26% 76%

FCF / Debt 0.5% 5.1% 3.3% 10.1% -1.5% -0.9% 3.1%

PROFITABILITY

EBIT Margin % 2.9% 4.2% 6.0% 7.6% 7.8% 8.2% 6.4%

EBITDA Margin % 8.5% 10.5% 12.7% 13.8% 14.2% 14.9% 13.9%

INTEREST COVERAGE

EBIT / Interest Expense 1.7x 2.7x 3.9x 3.9x 4.7x 5.7x 4.1x

EBITDA / Interest Expense 5.1x 6.8x 8.2x 7.0x 8.5x 10.4x 9.0x

LEVERAGE

Debt / EBITDA 4.3x 3.2x 4.0x 4.2x 3.7x 3.5x 4.1x

Net Debt / EBITDA 3.5x 2.6x 1.5x 3.5x 2.3x 2.5x 0.9x

All ratios are based on 'Adjusted' financial data and incorporate Moody's Global Standard Adjustments for Non-Financial Corporations and represent Moody's forward view, not the view ofthe issuer, and unless noted in the text, does not incorporate significant acquisitions and divestitures.Source: Moody's Investors Service



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CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDITCOMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY,“PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. MOODY’S DEFINES CREDIT RISK AS THE RISK THAT AN ENTITY MAY NOT MEET ITS CONTRACTUALFINANCIAL OBLIGATIONS AS THEY COME DUE AND ANY ESTIMATED FINANCIAL LOSS IN THE EVENT OF DEFAULT OR IMPAIRMENT. SEE APPLICABLE MOODY’SRATING SYMBOLS AND DEFINITIONS PUBLICATION FOR INFORMATION ON THE TYPES OF CONTRACTUAL FINANCIAL OBLIGATIONS ADDRESSED BY MOODY’SCREDIT RATINGS. CREDIT RATINGS DO NOT ADDRESS ANY OTHER RISK, INCLUDING BUT NOT LIMITED TO: LIQUIDITY RISK, MARKET VALUE RISK, OR PRICEVOLATILITY. CREDIT RATINGS, NON-CREDIT ASSESSMENTS (“ASSESSMENTS”), AND OTHER OPINIONS INCLUDED IN MOODY’S PUBLICATIONS ARE NOTSTATEMENTS OF CURRENT OR HISTORICAL FACT. MOODY’S PUBLICATIONS MAY ALSO INCLUDE QUANTITATIVE MODEL-BASED ESTIMATES OF CREDIT RISK ANDRELATED OPINIONS OR COMMENTARY PUBLISHED BY MOODY’S ANALYTICS, INC. AND/OR ITS AFFILIATES. MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHEROPINIONS AND PUBLICATIONS DO NOT CONSTITUTE OR PROVIDE INVESTMENT OR FINANCIAL ADVICE, AND MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHEROPINIONS AND PUBLICATIONS ARE NOT AND DO NOT PROVIDE RECOMMENDATIONS TO PURCHASE, SELL, OR HOLD PARTICULAR SECURITIES. MOODY’S CREDITRATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS DO NOT COMMENT ON THE SUITABILITY OF AN INVESTMENT FOR ANY PARTICULAR INVESTOR.MOODY’S ISSUES ITS CREDIT RATINGS, ASSESSMENTS AND OTHER OPINIONS AND PUBLISHES ITS PUBLICATIONS WITH THE EXPECTATION AND UNDERSTANDINGTHAT EACH INVESTOR WILL, WITH DUE CARE, MAKE ITS OWN STUDY AND EVALUATION OF EACH SECURITY THAT IS UNDER CONSIDERATION FOR PURCHASE,HOLDING, OR SALE.

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IF IN DOUBT YOU SHOULD CONTACT YOUR FINANCIAL OR OTHER PROFESSIONAL ADVISER.ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY LAW, INCLUDING BUT NOT LIMITED TO, COPYRIGHT LAW, AND NONE OF SUCH INFORMATION MAY BE COPIEDOR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USEFOR ANY SUCH PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTENCONSENT.MOODY’S CREDIT RATINGS, ASSESSMENTS, OTHER OPINIONS AND PUBLICATIONS ARE NOT INTENDED FOR USE BY ANY PERSON AS A BENCHMARK AS THAT TERM ISDEFINED FOR REGULATORY PURPOSES AND MUST NOT BE USED IN ANY WAY THAT COULD RESULT IN THEM BEING CONSIDERED A BENCHMARK.All information contained herein is obtained by MOODY’S from sources believed by it to be accurate and reliable. Because of the possibility of human or mechanical error as wellas other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. MOODY'S adopts all necessary measures so that the information ituses in assigning a credit rating is of sufficient quality and from sources MOODY'S considers to be reliable including, when appropriate, independent third-party sources. However,MOODY’S is not an auditor and cannot in every instance independently verify or validate information received in the rating process or in preparing its Publications.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability to any person or entity for anyindirect, special, consequential, or incidental losses or damages whatsoever arising from or in connection with the information contained herein or the use of or inability to use anysuch information, even if MOODY’S or any of its directors, officers, employees, agents, representatives, licensors or suppliers is advised in advance of the possibility of such losses ordamages, including but not limited to: (a) any loss of present or prospective profits or (b) any loss or damage arising where the relevant financial instrument is not the subject of aparticular credit rating assigned by MOODY’S.To the extent permitted by law, MOODY’S and its directors, officers, employees, agents, representatives, licensors and suppliers disclaim liability for any direct or compensatorylosses or damages caused to any person or entity, including but not limited to by any negligence (but excluding fraud, willful misconduct or any other type of liability that, for theavoidance of doubt, by law cannot be excluded) on the part of, or any contingency within or beyond the control of, MOODY’S or any of its directors, officers, employees, agents,representatives, licensors or suppliers, arising from or in connection with the information contained herein or the use of or inability to use any such information.NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY CREDITRATING, ASSESSMENT, OTHER OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER.Moody’s Investors Service, Inc., a wholly-owned credit rating agency subsidiary of Moody’s Corporation (“MCO”), hereby discloses that most issuers of debt securities (includingcorporate and municipal bonds, debentures, notes and commercial paper) and preferred stock rated by Moody’s Investors Service, Inc. have, prior to assignment of any credit rating,agreed to pay to Moody’s Investors Service, Inc. for credit ratings opinions and services rendered by it fees ranging from $1,000 to approximately $5,000,000. MCO and Moody’sInvestors Service also maintain policies and procedures to address the independence of Moody’s Investors Service credit ratings and credit rating processes. Information regardingcertain affiliations that may exist between directors of MCO and rated entities, and between entities who hold credit ratings from Moody’s Investors Service and have also publiclyreported to the SEC an ownership interest in MCO of more than 5%, is posted annually at www.moodys.com under the heading “Investor Relations — Corporate Governance —Director and Shareholder Affiliation Policy.”Additional terms for Australia only: Any publication into Australia of this document is pursuant to the Australian Financial Services License of MOODY’S affiliate, Moody’s InvestorsService Pty Limited ABN 61 003 399 657AFSL 336969 and/or Moody’s Analytics Australia Pty Ltd ABN 94 105 136 972 AFSL 383569 (as applicable). This document is intendedto be provided only to “wholesale clients” within the meaning of section 761G of the Corporations Act 2001. By continuing to access this document from within Australia, yourepresent to MOODY’S that you are, or are accessing the document as a representative of, a “wholesale client” and that neither you nor the entity you represent will directly orindirectly disseminate this document or its contents to “retail clients” within the meaning of section 761G of the Corporations Act 2001. MOODY’S credit rating is an opinion as tothe creditworthiness of a debt obligation of the issuer, not on the equity securities of the issuer or any form of security that is available to retail investors.Additional terms for Japan only: Moody's Japan K.K. (“MJKK”) is a wholly-owned credit rating agency subsidiary of Moody's Group Japan G.K., which is wholly-owned by Moody’sOverseas Holdings Inc., a wholly-owned subsidiary of MCO. Moody’s SF Japan K.K. (“MSFJ”) is a wholly-owned credit rating agency subsidiary of MJKK. MSFJ is not a NationallyRecognized Statistical Rating Organization (“NRSRO”). Therefore, credit ratings assigned by MSFJ are Non-NRSRO Credit Ratings. Non-NRSRO Credit Ratings are assigned by anentity that is not a NRSRO and, consequently, the rated obligation will not qualify for certain types of treatment under U.S. laws. MJKK and MSFJ are credit rating agencies registeredwith the Japan Financial Services Agency and their registration numbers are FSA Commissioner (Ratings) No. 2 and 3 respectively.MJKK or MSFJ (as applicable) hereby disclose that most issuers of debt securities (including corporate and municipal bonds, debentures, notes and commercial paper) and preferredstock rated by MJKK or MSFJ (as applicable) have, prior to assignment of any credit rating, agreed to pay to MJKK or MSFJ (as applicable) for credit ratings opinions and servicesrendered by it fees ranging from JPY125,000 to approximately JPY550,000,000.MJKK and MSFJ also maintain policies and procedures to address Japanese regulatory requirements.

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Lanxess AG VP-Sr Credit Officer